Oil drops a Second Day amid EU summit doubts image

Oil fell below $US80 a barrel on Tuesday on concern that a meeting of European Union leaders this week will fail to solve EU problems.

The two-day summit in Brussels later this week will be the 20th time EU leaders have met to sort out a crisis that has spread across Europe since it began in Greece in early 2010.

Part of the Eurozone already is in recession and analysts expect its economy to slow down even more. That will further cut energy demand in a region that consumes 16 percent of the world’s oil.

“Market sentiment remains negative, focusing on slow demand and ample supply,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.

“The supply risk that supported oil is fading as production resumes in the Gulf of Mexico. The looming European Union embargo on Iranian oil may support Brent as it is also affecting oil flows to other nations.”

Oil companies had shut down over 44 percent of oil production in the Gulf on Monday after earlier forecasts showed the storm heading into the region, but producers were already returning workers to platforms and restoring output as the threat waned. Debby’s threat to the Gulf had pushed oil prices up about 2 percent on Friday.

In addition, in Norway, about 700 oil workers went on strike due to disagreements about salary and retirement age. A Norwegian petroleum association said the strike would result in closures of about 268,000 barrels of oil equivalent per day.